Industrial regulation is governmental oversight, guidelines, and enforcement designed to ensure protection of consumer pricing, approve mergers and acquisitions, and regulate market share activities related to a specific industry in order to promote competition and achieve allocative efficiency (McConnell, Brue & Flynn, 2011). Industrial regulation provides protection to the consumer by preventing the development of monopolized industries that allow for no consumer choice. The three main regulatory commissions of industrial regulation in the United States are: 1) Federal Trade Commission; 2) Federal Communication Commission; and the 3) Federal Energy Regulatory Commission.
Federal Trade Commission. The Federal Trade Commission (FTC) investigates consumer complaints and concerns regarding unfair competition, fraud, and misleading practices in the marketplace.

Federal Communication Commission. The Federal Communication Commission (FCC) is an independent agency of the United States governed by five presidentially-appointed commissioners. The commissioners serve a maximum term length of five years and no more than three commissioners can be affiliated with the same political party. The FCC is responsible for regulating communications in or initiating from the US. Communication channels that the FCC has jurisdiction over include television and radio airwaves, satellite and cable transmissions, and telegraph communications. The FCC was formed by Congress with the Communications Act of 1934.

Federal Energy Regulatory Commission. The Federal Energy Regulatory Commission (FERC) is an independent commission responsible for oversight in the energy industry. The FERC does not set rates, but oversee them to ensure fair consumer pricing and rates, issues licensing to some jurisdictional energy plants, and monitors compliance to environmental concerns in the electric, natural gas, hydroelectric, and oil pipeline industries.

In the nineteenth century, industrial growth in the United States developed to the point that companies became oligopolistic and monopolistic in structure and began to dominate certain industries such as oil and rail transportation. In the case of the railroads, the companies were charging consumers such high prices that public outcry sparked individual states to attempt to control the railroad monopolies. These attempts were ineffective. It was then, after battling the resistance to become involved in economic matters, that the federal government stepped in and passed legislation knows as the U.S. Antitrust policy. This policy includes four antitrust laws that establish the basic principles of law relating to the prevention of illegal monopolies and regulate the prices of natural monopolies to ensure that consumer demand is achieved in a way that is justified and reasonable.

Sherman Antitrust Act of 1890. The Sherman Act outlawed monopolies requiring all merger and acquisition activity to be subject to federal approval and disallowed price fixing and market division. All persons found in violation of forming monopolies or “trusts” were subject to monetary fines and/or imprisonment and permission was granted to entities and persons affected by the monopolistic activity to sue for damages. The fact that the law lacked clarity in many areas, the Congress later passed the amendment referred to as the Clayton Antitrust Law of 1914.

Clayton Antitrust Law of 1914. The Clayton Act’s primary goal was to support free competition by outlawing the following: 1) price discrimination: selling the same product to comparable buyers at different prices, 2) tying contracts: requiring the purchase of other products as a condition for purchasing the product that they buyer wants 3) corporate mergers that would lead to reduced market competition, and 4) interlocking directorates which refers to board members serving on multiple boards of companies that are in competition. GOVERNMENTAL REGULATION 4

Federal Trade Commission Act of 1914. The Federal Trade Commission Act established the Federal Trade Commission (FTC) to be responsible for the enforcement of the antitrust laws along with the U. S. Justice Department. The FTC was given the authority to investigate alleged unfair practices in terms of market competition. The FTC was given further responsibility years later in an amendment to the Federal Trade Commission Act known as the Wheeler-Lea Act of
1938. This amendment added the duty of protecting consumers from false and misleading advertising.

Celler-Kefauver Act of 1950. The Celler-Kefauver Act was an amendment of the Clayton Act where it prohibits corporate mergers through the purchase of shares of stock that would lead to reduced market competition. Corporate mergers of competing companies were taking place not through the sale of stock, but through the actual purchase of physical assets. The Celler-Kefauver Act provided complete prohibition of anticompetitive mergers regardless of the agreement.

Years later, a shift in concern occurred and another method of governmental regulation emerged. Social regulation is governmental regulation that protects consumers through legislation and enforcement of mandatory guidelines associated with the production of consumer goods. These regulations exist to preserve public welfare and address societal issues such as environmental concerns, product and workplace safety, and workplace discrimination. The reach of social regulation is much broader than the reach of industrial regulation and its policies have an affect in one way or another on all industries (McConnell, Brue & Flynn, 2011). The regulatory agencies that were established are the Equal Employment Opportunity Commission, Environmental Protection Agency, Food and Drug Administration, Occupational Safety and Health Administration, and the Consumer Product Safety Commission.

Equal Employment Opportunity Commission. The U.S. Equal Employment Opportunity Commission (EEOC) enforces laws pertaining to discriminatory practices in the workplace on the basis of race, color, religion, sex, national origin, disability, genetic information, or age.

Environmental Protection Agency. The Environmental Protection Agency (EPA) was formed to provide protection to citizens by mitigating environmental risks to the population’s health and well-being. The primary functions of the EPA are 1) Pollution Prevention; 2) Risk Assessment and reduction; 3) research to deal with environmental problems; 4) developing regulatory standards; and 5) environmental education.

Food and Drug Administration. The Food and Drug Administration (FDA) is a federal agency that has been given the responsibility of protecting the health and welfare of U. S. citizens by safeguarding against potential hazards that may lie in foods, over-the-counter medicines, medical equipment, cosmetics, and other chemical substances. Since its inception, the responsibilities and role of the FDA has substantially increased and has grown to now even include bioterrorism by assisting in the development, production, and testing of vaccines aimed at countering the effects of a bioterror attack.

Occupational Safety and Health Administration. The main functions of the Occupational Safety and Health Administration (OSHA) include the health and safety of workers in the workplace, advising employees, employee representation groups, and employers on the most effective ways to prevent occupational injury. Workplace inspections are commonplace to investigate employers and ensure compliance of standards are being followed.

Consumer Product Safety Commission. The Consumer Product Safety Commission (CPSC) has been given the mandate to guard the public from faulty products that pose a potential safety hazard to consumers. For example, items such as cribs that are built to standards that pose a threat to children or toys that contain dangerous chemicals such as lead have been products that highlight the agency’s responsibility and have resulted in many product recalls.

Although the U. S. government has taken steps to fight the monopolization of markets and promote the attributes of a free market society, there are times when the support of a monopoly is in order. Natural monopolies are established when the condition exists where an entity has an advantage in initial infrastructure, technology, or other related startup costs that would be a barrier to other firms entering the market. This can create a marketplace that is void of true market competition. Dependent upon the specific characteristics of the industry, support by the federal government can be warranted if it provides a greater benefit to the consumers either through regulated pricing or even security.

If we look for the rationale of a government sanctioned natural monopoly, we can point to an element of national security. The current uranium mining and processing industry is regulated by the Nuclear Regulatory Commission (NRC). The NRC ensures this nuclear source material is produced in a safe manner and the commerce activities of this material are closely monitored. In the case of uranium mining, government oversight manages the supply of raw material and the refined products associated with uranium because the recent commercialization of uranium and its refined products has taken the one time consumer, the U.S. Department of Defense, to a host of consumers for uses in such products as glass, ceramics, toners, and textiles. In this case, the need for a natural monopoly is clearly apparent.

REFERENCES

McConnell, Brue, Campbell., Flynn, Stanley., Sean. (2011-01-01). Economics [19] (VitalSource Bookshelf), Retrieved from http://online.vitalsource.com/books/0077771699/id/L18-1-1